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Investing.com -- Europe-focused equity funds have experienced continued inflows, with a total of $17 billion over the past four weeks, according to Bank of America.
Active funds attracted $2 billion, while passive funds drew in a significant $14.9 billion. Sector-wise, Size stocks led with inflows of $6.7 billion, followed by Industrials at $3.9 billion, and Germany at $2.8 billion. In contrast, the UK saw outflows of $1.6 billion, and Risk stocks experienced outflows of $1.4 billion.
Style Cycle in Europe continues to favor the ’Recovery’ phase for the 15th consecutive month, despite a decline in the European Composite Macro (BCBA:BMAm) Indicator (CMI) over the last month. The ’Recovery’ phase typically benefits Value stocks over Growth stocks, Rising Momentum, Low Quality, High Risk, and favors Small-Mid cap stocks over Large cap stocks. In this phase, the top ’Recovery’ stocks outperformed the bottom ones, with a gain of 0.3% in the past month.
The CMI, which is a composite of six inputs, saw a decline across all its components for the first time in five years. The inputs include the 12-month change in European 10-year bond yield, Global EPS Revision Ratio, European Producer Price Index (PPI), German IFO Business Climate Index, BofA Europe Leading Indicator, and European GDP forecasts. Despite this decline, the Style Cycle has not transitioned out of the ’Recovery’ phase, as it would require two consecutive monthly declines to do so.
During the month of May, the top ’Recovery’ stocks received $0.2 billion in inflows, while the bottom ’Recovery’ stocks saw slightly higher inflows amounting to $0.4 billion. These figures reflect the ongoing investor interest in the European equity markets, particularly in segments that are perceived to benefit during the recovery phase of the economic cycle.
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